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Press release from PR Newswire

The Hain Celestial Group Announces Record Third Quarter Results

Tuesday, May 03, 2011

The Hain Celestial Group Announces Record Third Quarter Results16:09 EDT Tuesday, May 03, 2011Net Sales Increase 29.8% to $288.4 Million GAAP Earnings $0.38 Per Diluted Share Adjusted Earnings $0.36 Per Diluted Share Before Acquisition Related ItemsMELVILLE, N.Y., May 3, 2011 /PRNewswire/ -- The Hain Celestial Group, Inc. (Nasdaq: HAIN), a leading natural and organic products company providing consumers with A Healthy Way of Life?, today reported results for the third quarter ended March 31, 2011. Reflecting record sales for the third quarter, net sales increased 29.8% to $288.4 million from net sales of $222.1 million in the prior year third quarter. The Company continued its growth momentum with gains across the Hain Celestial worldwide portfolio.  In the third quarter, the Company earned $16.8 million in net income as compared to $2.7 million in the prior year third quarter, and reported earnings of $0.38 per diluted share as compared to $0.06 per diluted share in the prior year third quarter.  Earnings per diluted share were $0.36 on adjusted net income of $16.2 million in this year's third quarter as compared to $0.26 per share on adjusted net income of $10.6 million in the prior year third quarter(1).  On an adjusted basis, net income and diluted earnings improved 53% and 38% respectively, over the prior year third quarter(1). Operating margin was 10.7% on a GAAP basis in this year's third quarter, a 198 basis point improvement from 8.7% in the prior year third quarter.  On an adjusted basis, operating margin was 10.1% in this year's third quarter, improving 66 basis points from 9.4% in the prior year third quarter(1)"Our third quarter results reflect the strength of our brands and our solid execution across various classes of trade in the growing natural and organic industry," said Irwin D. Simon, President and Chief Executive Officer of Hain Celestial.  "All of our reporting units grew, both in the United States and abroad.  Strong top line performance came from our Grocery and Snacks, Celestial Seasonings and Personal Care units with solid contributions from our Canadian and European units.  Key brands that experienced double-digit sales growth were Earth's Best® infant and toddler products, MaraNatha® nut butters, Spectrum® oils, Dream? non-dairy frozen desserts, Terra® chips, Lima® organic foods and Avalon® and Alba® personal care brands as well as our recently acquired brands, Sensible Portions® snacks and The Greek Gods® yogurt.  Gross profit in this year's third quarter improved 90 basis points to 28.6% of net sales compared to 27.7% of net sales in the prior year third quarter. The higher gross profit performance resulted from the favorable mix of product sales worldwide which together with productivity savings offset increased input costs.  Selling, general and administrative expenses were 18.6% of net sales in this year's third quarter compared to 19.0% in the prior year third quarter.  The Company has continued to benefit from leveraging its existing infrastructure across its expanded portfolio of brands, including acquisitions.  Compared to the prior year third quarter, these expenses increased due to the higher amortization related to recent acquisitions and a higher level of product demonstrations and store level sampling.Operating free cash flow for the 12-month period ended March 31, 2011 was $61.0 million(1). The Company had working capital of $170.7 million at March 31, 2011.  Debt was $237.3 million or 28.3% of equity of $839.2 million at March 31, 2011.  "As the natural and organic industry continues to experience accelerating growth trends, Hain Celestial's portfolio of brands is well-positioned to meet consumer demands.  We recently introduced over 50 new and improved products to strengthen our leadership position and support these trends," commented Irwin Simon.  "The foundation we established to position the Company for sustainable long-term growth has enabled us to experience a resurgence in our sales, earnings and margins.  As we move toward the end of our fiscal year, we expect to continue to build our brands and drive profitable growth with product innovation and productivity initiatives, despite the challenges of increasing input costs."Fiscal Year 2011 Outlook The Company updated its fiscal year 2011 sales guidance to $1.095 to $1.115 billion and its earnings guidance to $1.30 to $1.34 per diluted share adjusted.  The guidance excludes acquisition and integration expenses that may be incurred during the Company's fiscal year 2011, which the Company will continue to identify when it reports its financial results.WebcastHain Celestial will host a conference call and webcast at 4:30 PM Eastern Time today to review its third quarter fiscal year 2011 results. The conference call will be webcast and available under the Investor Relations section of the Company's website at www.hain-celestial.com.The Hain Celestial Group, Inc.The Hain Celestial Group (Nasdaq: HAIN), headquartered in Melville, NY, is a leading natural and organic products company in North America and Europe. Hain Celestial participates in many natural categories with well-known brands that include Celestial Seasonings®, Earth's Best®, Terra®, Garden of Eatin'®, Sensible Portions®, Health Valley®, Arrowhead Mills®, MaraNatha®, SunSpire®, DeBoles®, Gluten Free Cafe?, Hain Pure Foods®, Hollywood®, Spectrum Naturals®, Spectrum Essentials®, Walnut Acres Organic®, Imagine®, Almond Dream®, Rice Dream®, Soy Dream®, WestSoy®, The Greek Gods®, Ethnic Gourmet®, Yves Veggie Cuisine®, Granose®, Realeat®, Linda McCartney®, Daily Bread?, Lima®, Danival®, GG UniqueFiber?, Grains Noirs®, Natumi®, JASON®, Zia® Natural Skincare, Avalon Organics®, Alba Botanica®, Queen Helene®, Tushies®, Earth's Best TenderCare® and Martha Stewart Clean?.  Hain Celestial has been providing "A Healthy Way of Life?" since 1993.  For more information, visit www.hain-celestial.com.Safe Harbor Statement This press release contains forward-looking statements under Rule 3b-6 of the Securities Exchange Act of 1934, as amended.  Words such as "expect," "expected," "anticipate," "estimate," "believe," "may," "potential," "can," "positioned," "should," "plan," "continue," "future," "look forward" and similar expressions, or the negative of those expressions, may identify forward-looking statements.  Forward-looking statements involve known and unknown risks and uncertainties, which could cause our actual results to differ materially from those described in the forward-looking statements. These forward-looking statements include our expectations relating to (i) growth trends in the natural and organic industry and our ability to meet consumer demand and (ii) our performance for the remainder of fiscal year 2011.  These risks include but are not limited to our ability to achieve our guidance for net sales and earnings per diluted share in fiscal year 2011 given the environment in the U.S. and other markets in which we sell products as well as economic and business conditions generally and their effect on our customers and consumers' product preferences, and our business, financial condition and results of operations; changes in estimates or judgments related to our impairment analysis of goodwill and other intangible assets; our ability to implement our business and acquisition strategy, including our strategy for improving results in Europe; Hain Pure Protein Corporation's ("HPP") ability to implement its business strategy; our ability to realize sustainable growth generally and from investing in core brands, offering new products and focusing on cost containment, productivity, cash flow and margin enhancement in particular; our ability to effectively integrate our acquisitions; our ability to successfully execute our joint ventures; competition; the success and cost of introducing new products as well as our ability to increase prices on existing products; the availability and retention of key personnel; our reliance on third party distributors, manufacturers and suppliers; our ability to maintain existing contracts and secure and integrate new customers; our ability to respond to changes and trends in customer  and consumer demand, preferences and consumption; international sales and operations; increases in fuel and commodity costs; the effects on our results of operations from adverse impacts of foreign exchange; changes in, or the failure to comply with, government regulations; and other risks detailed from time-to-time in the Company's reports filed with the Securities and Exchange Commission, including the annual report on Form 10-K for the fiscal year ended June 30, 2010.  As a result of the foregoing and other factors, no assurance can be given as to future results, levels of activity and achievements and neither the Company nor any person assumes responsibility for the accuracy and completeness of these statements.Non-GAAP Financial MeasuresManagement believes that the non-GAAP financial measures presented provide useful additional information to investors about current trends in the Company's operations and are useful for period-over-period comparisons of operations.  These non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures.  In addition, these non-GAAP measures may not be the same as similar measures provided by other companies due to potential differences in methods of calculation and items being excluded.  They should be read only in connection with the Company's Consolidated Statements of Income presented in accordance with GAAP.Operating Free Cash Flow is a non-GAAP financial measure.  The Company defines Operating Free Cash Flow as cash provided from or used in operating activities less capital expenditures.  For the 12-month period ended March 31, 2011, cash provided by operating activities was $72.9 million and capital expenditures were $11.9 million for a net total of $61.0 million.  For the 12-month period ended March 31, 2010, cash provided by operating activities was $69.7 million and capital expenditures were $10.3 million for a net total of $59.4 million.  This press release and the accompanying tables also include non-GAAP financial measures which are referred to as "adjusted." The reconciliations of these non-GAAP financial measures to the comparable GAAP financial measures are presented in the tables Consolidated Statements of Income with Adjustments for the three months and nine months ended March 31, 2011 and 2010. These non-GAAP financial measures exclude the items listed at the bottom of the tables.(1) See Non-GAAP Financial measures and related Reconciliation of GAAP Results to Non-GAAP Financial PresentationTHE HAIN CELESTIAL GROUP, INC.Consolidated Balance Sheets(In thousands)March 31, June 30, 2011 2010 (Unaudited) ASSETSCurrent assets:Cash and cash equivalents$       25,571$      17,266Trade receivables, net141,981114,215Inventories166,959157,012Deferred income taxes11,01810,738Other current assets16,40814,586Total current assets361,937313,817Property, plant and equipment,  net110,131106,985Goodwill, trademarks and other intangibles, net789,753714,584Investments in and advances to affiliates44,86946,041Other assets18,89616,660Total assets $  1,325,586$ 1,198,087LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities:Accounts payable and accrued expenses$     178,386$    129,282Income taxes payable12,3809,530Current portion of long-term debt51238Total current liabilities191,278138,850Deferred income taxes 42,75538,283Other noncurrent liabilities15,54630,227Long-term debt, less current portion236,761225,004Total liabilities486,340432,364Stockholders' equity:Common stock445437Additional paid-in capital571,327548,782Retained earnings283,038240,904Treasury stock(18,328)(17,529)Accumulated other comprehensive income2,764(6,871)Total stockholders' equity839,246765,723Total liabilities and stockholders' equity$  1,325,586$ 1,198,087THE HAIN CELESTIAL GROUP, INC. Consolidated Statements of Income (in thousands, except per share amounts) Three Months Ended March 31,Nine Months Ended March 31,2011201020112010(Unaudited)(Unaudited)Net sales$ 288,386$ 222,098$ 838,225$ 694,549Cost of sales205,822160,596600,167501,339Gross profit82,56461,502238,058193,210Selling, general and administrative expenses53,66442,161158,814131,907Acquisition related expenses including integration and restructuring charges(1,920)1692,936Operating income30,82019,34179,07558,367Interest expense  and other expenses2,8512,0248,8358,581Income before income taxes and equity in earnings of equity-method investees27,96917,31770,24049,786Income tax provision11,07614,00828,60126,073After-tax (income) loss of equity-method investees121653(495)1,785Net income$   16,772$     2,656$   42,134$   21,928Basic net income per share$       0.39$       0.07$       0.98$       0.54Diluted net income per share$       0.38$       0.06$       0.95$       0.53Weighted average common shares outstanding:Basic43,20240,83842,98540,771Diluted44,71141,38344,32141,298THE HAIN CELESTIAL GROUP, INC. Consolidated Statements of Income With Adjustments Reconciliation of GAAP Results to Non-GAAP Presentation (in thousands, except per share amounts) Three Months Ended March 31,2011 GAAPAdjustments2011 Adjusted2010 Adjusted (1)(Unaudited)Net sales$      288,386$      288,386$      222,098Cost of Sales205,822$          (83)205,739160,596Gross profit82,5648382,64761,502Selling, general and administrative expenses53,66453,66440,638Acquisition related expenses including integration and restructuring charges(1,920)1,920--Operating income30,820(1,837)28,98320,864Interest and other expenses, net2,851(469)2,3822,024Income before income taxes and equity in earnings of equity-method investees27,969(1,368)26,60118,840Income tax provision11,076(769)10,3078,257After-tax (income) loss of equity-method investees121(70)51(54)Net income$       16,772$         (529)$       16,243$       10,637Basic net income per share$           0.39$        (0.01)$           0.38$           0.26Diluted net income per share$           0.38$        (0.02)$           0.36$           0.26Weighted average common shares outstanding:Basic43,20243,20240,838Diluted44,71144,71141,383FY 2011FY 2010 (1)Impact on Income Before Income TaxesImpact on Income Tax ProvisionImpact on Income Before Income TaxesImpact on Income Tax Provision(Unaudited)  Acquisition related integration costs $             83Cost of sales83---  Litigation settlements$          1,523$            577Selling, general and administrative expenses--1,523577  Acquisition related expenses1,690586  Contingent consideration (income)(4,130)(1,531)  Severance and other reorganization costs52010Acquisition related expenses and restructuring charges(1,920)(935)--  Accretion on acquisition related contingent consideration469166Interest and other expenses, net469166--  Net loss from HPP discontinued operation70-707-Equity in net (income) loss of HPP70-707-  Valuation allowance recorded on UK deferred tax assets(6,328)Total adjustments$         (1,298)$                (769)$          2,230$         (5,751)Notes:(1) The fiscal year 2010 non-GAAP presentation reflects (i) the cessation in the third quarter of recording tax benefits for the United Kingdom losses and (ii) the treatment by HPP of Kosher Valley as a discontinued operation beginning in the fourth quarters as applied to the first three quarters.THE HAIN CELESTIAL GROUP, INC. Consolidated Statements of Income With Adjustments Reconciliation of GAAP Results to Non-GAAP Presentation (in thousands, except per share amounts) Nine Months Ended March 31,2011 GAAPAdjustments2011 Adjusted2010 Adjusted (1)(Unaudited)Net sales$           838,225$                  838,225$                  694,549Cost of Sales600,167$                (794)599,373501,339Gross profit238,058794238,852193,210Selling, general and administrative expenses158,814158,814130,384Acquisition related expenses including integration and restructuring charges169(169)--Operating income79,07596380,03862,826Interest and other expenses, net8,835(1,374)7,4617,371Income before income taxes and equity in earnings of equity-method investees70,2402,33772,57755,455Income tax provision28,60125028,85123,924After-tax (income) loss of equity-method investees(495)(322)(817)141Net income$             42,134$               2,409$                    44,543$                    31,390Basic net income per share$                 0.98$                 0.06$                        1.04$                        0.77Diluted net income per share$                 0.95$                 0.06$                        1.01$                        0.76Weighted average common shares outstanding:Basic42,98542,98540,771Diluted44,32144,32141,298FY 2011FY 2010 (1)Impact on Income Before Income TaxesImpact on Income Tax ProvisionImpact on Income Before Income TaxesImpact on Income Tax Provision(Unaudited)  Acquisition related integration costs $             794$               69Cost of sales79469--  Litigation settlements$                 1,523$                    577Selling, general and administrative expenses--1,523577  Acquisition related expenses3,0241,039  Contingent consideration (income)(3,687)(1,364)  Severance and other reorganization costs83221$                 2,936Acquisition related expenses and restructuring charges169(304)2,936-  Accretion on acquisition related contingent consideration1,374485  Unrealized loss on investment1,210$                         450Interest and other expenses, net1,3744851,210450  Net loss from HPP discontinued operation322-1,644-Equity in net (income) loss of HPP322-1,644-  Valuation allowance recorded on UK deferred tax assets(3,176)Total adjustments$          2,659$             250$                 7,313$                (2,149)Notes:(1) The fiscal year 2010 non-GAAP presentation reflects (i) the cessation in the third quarter of recording tax benefits for the United Kingdom losses as applied to the prior two quarters and (ii) the treatment by HPP of Kosher Valley as a discontinued operation beginning in the fourth quarters as applied to the first three quarters.SOURCE The Hain Celestial Group, Inc.For further information: Ira Lamel or Mary Anthes of The Hain Celestial Group, Inc., +1-631-730-2200